January 26, 2010

Crony Commies

Until the security police knocked on their doors last year, Le Cong Dinh, Le Thang Long, and Tran Huynh Duy Thuc represented the best-and-brightest of Vietnam’s emerging new professional generation. Dinh, 41, an American-educated lawyer, had moved in elite Vietnamese corporate and legal circles since his early 30s; he was an active member of the American Chamber of Commerce in Ho Chi Minh City. To Dinh’s admirers in the US business community, he personified Vietnam’s progress along the road to the rule of law. Dinh’s friends Long and Thuc were young Internet entrepreneurs who played important roles over the past decade in developing Vietnam’s emerging information-technology sector. They became involved with technology aimed at facilitating the ability of Vietnamese people to communicate freely with each other with telephones and computers, wherever they happened to be in the world. Long and Thuc likewise enjoyed good connections with the US high-tech business community, most notably involving their partnership with the U.S. networking powerhouse from America’s Silicon Valley, Cisco Systems (also a prominent member of the American Chamber in Vietnam). The three young Vietnamese friends’ professional careers demonstrated their shared belief that their poor Third World country could become an increasingly prosperous entrepreneurial society.

As part of their country’s modernization, Dinh, Long and Thuc also made no secret of their belief that Vietnam’s best interests were in developing into a free multi-party democracy. They looked forward to the day when Vietnamese citizens, like their counterparts in other modern societies where the rule of law prevails, will enjoy the freedoms of speech and assembly that presently the ruling Communist Party denies them. Of course, the Politburo — dominated by hardliners who are jockeying for position as next year’s party congress gets closer — was having none of that. On Jan. 20, after a classic communist show trial in Ho Chi Minh City (still better known as Saigon) the three peaceable democracy advocates received stiff prison terms. Thuc, now 43, got 16 years, apparently being punished for vehemently protesting his innocence. According to a translation by the BBC’s authoritative Vietnamese language service, Thuc charged that his “confession” had been made under duress that involved unspecified “corporal punishment,” a charge that the court was not interested in entertaining. Long, 42, got five years as an accomplice. Dinh — who, like his friends, could have been given the death sentence — also got off a bit easier, with a five-year sentence. The judges seemed to be swayed by Dinh’s contrite acknowledgment that he had been influenced by western notions of freedom while studying abroad, and that as a lawyer he could now see that advocating multi-party democracy violated Vietnamese law.

Because such a notion is, on its face, offensive, reaction to the verdicts was as swift as it was critical. U.S. Ambassador Michael Michalak protested on Jan. 21 that the “convictions run counter to the Universal Declaration of Human Rights, and they also raise serious questions about Vietnam’s commitment to rule of law and reform.” The European Union’s heads of mission in Hanoi issued a joint statement calling the trial and verdicts “a major and regrettable step backwards for Vietnam.” The EU ambassadors noted that the convictions “are not consistent with the fundamental right of all persons to hold opinions and freely and peacefully express them, in accordance with the Universal Declaration of Human rights and Article 19 of the International Covenant on Civil and Political Rights, to which Vietnam is a party.” Respected advocacy organizations like Human Rights Watch and Amnesty International also voiced their deep concerns over the injustice.

But Dinh’s, Long’s, and Thuc’s former friends in the American business community were conspicuous for their silence. Top leaders of the American Chamber of Commerce sister chapters in Hanoi and Ho Chi Minh City adamantly refused to express any concerns whatsoever — even off-the-record — about the fate of their former esteemed colleagues. This is not just happenstance, but a carefully considered stance. The AmCham leaders have rebuffed requests for the past six months for their comment on the current Vietnamese crackdown on dissenters (for further details, see An Inconvenient Man, The Rushford Report. Sept. 21, 2009). In an e-mail last week, I asked AmCham’s executive director in the organization’s Ho Chi Minh City chapter if he were concerned that the inevitable impression that he and his colleagues were creating was that the top priority for the American business community is in political stability, Politburo-style. Herb Cochran said he would check again with his board, and also with that of his sister AmCham in Hanoi. It turned out that neither board cared to deny the perceptions, even privately. The inescapable conclusion is that the signal that the American business community in Vietnam has sent to the top leadership in Hanoi is deliberate. The crackdown on dissenters enjoys the tacit support of corporate America.

The explanation, at first blush, looks simple enough. Corporations like ExxonMobil, Citi, Emerson Electric, and Chevron which are on the AmCham Vietnam boards in Hanoi and Ho Chi Minh city aren’t on anyone’s list of bleeding hearts. But for anyone interested in where the Vietnamese economy is presently headed, and how the US business community fit in, there’s much more to the story. The American business community has developed deep ties with the ruling Communist authorities and the government-owned enterprises and (corrupt) government agencies they control. These ties appear to be deep enough that the Americans now see their mutual economic interests with Vietnam’s leaders as essentially parallel. The way that Vietnam’s economy is developing, one doesn’t have to share anti-corporate filmmaker Michael Moore’s conspiratorial view of the world to perceive a disturbing economic and political convergence. You could call it, Crony Communism.

Here’s how it works.

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In America’s shooting war with Vietnam that spanned the era from the 1950s until Ho Chi Minh’s determined forces emerged victorious in 1975, the Americans first came in proclaiming their belief that they were idealistic warriors against communism. As the whole world now knows, gradually the Americans got in deeper and deeper, in a country they didn’t really understand, until they were trapped in what turned out to be a tragic loss of lives on both sides. In more recent years as Vietnam’s leaders (commendably) began opening their economy, the American business community presented itself as economic reformers, eager to ride to the rescue of a failed Marxist-Leninist economy. There was much truth to that claim. But gradually, in the past decade-plus, the corporations seem to have been drawn into increasingly closer ties with the old communists who still hold the economic power in the country. These days, the chief economic reforms that the American Chamber of Commerce in Vietnam advocates are those that directly affect their own corporate bottom lines. As for the peaceable pro-democracy advocates like Dinh, Long and Thuc, the AmCham appears to share the Politburo’s view: they are troublemakers who are in the way.

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Testifying before the U.S. House and Ways and Means Committee on June 17, 1999, AmCham (Hanoi) board member Greig Craft spoke in idealistic terms. This was when the U.S. business community was lobbying Congress to approve an expanded bilateral trade relationship with Vietnam, which would eventually lead to the Southeast Asian country’s 2007 accession to the World Trade Organization. “In addition to pursuing commercial opportunities, we all have an ongoing interest to promote human rights and democratic freedom throughout the world.” Craft told lawmakers. “The process of economic development bodes well for eventual political liberalization in Vietnam as well.”

Craft is still active in Vietnam, and is still listed as an AmCham member. He also still proclaims his idealism, and seeks publicity these days for a humanitarian foundation he has created to encourage those ubiquitous Vietnamese motorbike drivers to wear safety gear. But the idealistic Craft did not respond to a journalistic inquiry earlier this month asking whether he would still stand by his assurances to Congress eleven years ago that Vietnam would allow more freedoms for its people. Nor are AmCham’s current leaders willing to entertain the subject.

The chairman of AmCham’s Ho Chi Minh City chapter, Tom Siebert, said in a Nov. 3, 2009 e-mail that the organization is a “non-political” organization. “We will limit our comments and recommendations to issues that directly affect trade and investment between the United States and Vietnam.” When I asked Siebert what he would have to say now to trade skeptics on Capitol Hill who are asking what happened to the political liberalization that was supposed to be well underway by now, he declined to respond.

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Nor have other prominent AmCham leaders been willing to talk about rule-of-law issues, or their former friend Dinh. Fred Burke, managing partner in the Ho Chi Minh City office of Baker & McKenzie, chairs the AmCham legal committee, of which Dinh was a member until his arrest last June. Was Dinh your friend? I asked Burke. He did not respond.

Burke’s client roster suggests a reason for the lawyer’s reticence. Banker & McKenzie’s Vietnam officers have represented major foreign lenders who need government permissions to operate, including Citibank and the Japan Bank for International Cooperation. Baker & McKenzie promotional materials say that the firm’s Vietnam practice has represented “foreign clients in inbound investment deals, such as RHB Investment Bank’s acquisition of 49% shares in Vietnam Securities.” Another deal that Burke apparently worked on involved the application on behalf of Asian Coast Development “for a license for the construction of an integrated resort, such as a casino in Ho Tram, valued at US$4 billion.” Burke also worked on a deal involving financing Vietnam’s “first oil refinery, acting for BNP Paribas on the US$300 million loan for the construction of the project.” (which had a total value of $2.5 billion). Burke has also helped “a foreign brewery maker on a US$24 million acquisition of a stake in Vietnam’s Saigon Beer Alcohol-Beverage Corporation.”

Since Burke’s legal practice seems to depend so heavily on not rocking the boat with various Vietnamese government entities, I asked him in an e-mail if it would be fair to assume that that explained his his reluctance even to mention Dinh’s name. He declined to comment.

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Burke, according to press clips that turned up on extensive Internet searches, also has been a player in Vietnam’s emerging high-tech industry. In Dec. 2004, Burke participated, along with representatives of Cisco Systems and other AmCham luminaries, in a conference sponsored by the Hochiminh Computer Association that highlighted business and legal aspects of Vietnam’s information-technology development. The now-convicted Duy Thuc also appeared on a panel that addressed data-networking issues, along with Amy Vo, a sales manager for Cisco Systems. Everyone who participated in the conference represented Vietnam’s emerging high-tech elite.

Spokesmen for Cisco’s CEO, John Chambers, decline to comment on Cisco’s business relationship with Thuc and Le Thang Long. But while the available public record is incomplete, there is little doubt that the two Vietnamese entrepreneurs had close ties with Cisco and the American business community.

CNN.com reported from Hanoi on March 20, 2001 that Vietnam’s Electronics and Information Systems Inc (which was known by its acronym, EIS) was planning on a listing on the Ho Chi Minh City fledgling stock exchange, which then only had five companies. EIS deputy general director then was Le Thang Long, who told reporters that his company had been founded in 1993, and became a joint stock company in 2000. “Long says EIS has established a long-term relationship with networking giant Cisco Systems, and has conducted business in Thailand and Singapore with plans to expand its operations to the United States,” according to the CNN report.

On Aug. 31, 2001 Cisco Systems issued a press release that touted its ties with Thuc’s and Long’s EIS. According to the release, EIS and Cisco were working to build a “world-class” Saigon Software Park with Cisco Equipment.” The release identified EIS as “one of Cisco’s premier partners,” and said that the Vietnamese firm “is the major integrator for SSP’s network.” Tran Huynh Duy Thuc, who was then EIS chairman and CEO, was quoted in the release, saying that “EIS is very proud to be the lead integrator for this project. With the professional skills of EIS’ staff and Cisco’s industry-leading technologies, SSP’s infrastructure was deployed in record time.”

Cisco’s relationship with EIS extended at least to 2006, according to the available public record. A spokesperson for the Saigon stock exchange relates that EIS never became a listed company, for reasons that are not explained on the available public record.

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The latest venture that Thuc and Long were involved with concerned a Singapore-based Internet telephone company they set up called One Connection Internet. This online telephone advertising service, according to a 2008 report in VietNamNet Bridge, was focused on customers in Vietnam. It is easy to imagine how frightening this enterprise was to Vietnamese authorities, who, like their counterparts in China, are determined to control how their citizens communicate with each other online.

Last year the Ho Chi Minh City’s department of information and communications announced that it was cracking down on OCI, which it said had been offering unlicensed Internet-based phone services to Vietnam from Singapore and other countries. The Vietnamese information ministry’s announcement reported that officials were upset that “mobile phone and fixed phone subscribers from the US, Canada and Australia used the cards to make Internet phone calls to Vietnam with a billing module installed in Vietnam.” It added that “Overseas calls were routed through a voice access gateway in Singapore where its validity was confirmed before being forwarded to a Vietnamese subscriber.”

While most observers would praise highly any such entrepreneurial venture aimed at allowing Vietnamese people to communicate with each other freely, to Vietnam’s government, Thuc and Long’s business was “illegal.” Early last year, apparently shortly before Long and Thuc were arrested, OCI’s equipment was confiscated.

This year, the Vietnamese authorities have stepped up their efforts to control how their citizens communicate with each other over the Internet, with the latest move being to block the American-owned social networking site, Facebook.

As for Cisco Systems, various press reports allege that the company has helped Chinese authority impose its own Great Firewall, charges that the company denies. It is not publicly known if Cisco operatives are cooperating with Vietnamese government authorities in such endeavors, although there are such suspicions in the human-rights community. (Stay tuned.)

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For further insights into how crony communism works in today’s Vietnamese economy, consider a January 21 report by Bill Hayton in Foreign Policy. Hayton is a former respected BBC correspondent in Hanoi whose press credentials were not renewed by Vietnamese authorities, apparently after he filed too many reports that did not toe the party line.

In his Foreign Policy report, Hayton cited telling examples of how, “despite an influx of new wealth, the Communist Party still dominates both the public and private sectors” in Vietnam. He noted that “many” ostensibly private businesses “are either former state-owned enterprises or still have some state ownership, and most are still run by party members.” Hayton added: “Most of the controllers of the commanding heights of the private sector are party appointees, their family, or their friends. The communist Party elite are turning Vietnamese capitalism into a family business.”

To illustrate how that family business works, Hayton pointed to the 2008 wedding in a Saigon luxury hotel that Vietnam war veterans will well-remember, the Caravelle. Nguyen Bao Hoang, the managing general partner of IDG Ventures Vietnam, an investment firm, had married a 27-year old bride named Nguyen Thanh Phuong — the daughter of Prime Minister Nguyen Tan Dung. “The man she was marrying is an American citizen, the child of parents who fled Vietnam in 1975 to escape the communists — now returned to wed the daughter of one of them,” Hayton observed.

Nguyen Bao Hoang’s IDG Ventures is an active member of the American Chamber of Commerce in Vietnam.

Another AmCham board member, Virginia Foote, also has been cultivating Nguyen Tan Dung’s father the prime minister. The website for Foote’s Vietnam Partners, an investment bank, displays a photo of Foote and Nguyen Tan Dung taken when she and other Vietnam Partners associated met with the prime minister in Hanoi on June 1, 2007.

“The US-based Vietnam Partners group’s top executives pledged investment in Vietnam and sought the Government’s help in smoothing the path for their plan during their meeting,” the Vietnam Partners website relates. “In the meeting, the group’s President, Virginia B. Foote, said she would make greater efforts to boost US-Vietnam co-operative ties in various fields, in addition to boosting her company’s investment into the southeast Asian market.”

The Vietnam Partners’ website adds this telling sentence on what the prime minister had to say when Foote asked his help in “smoothing the path” for Vietnam Partners: “In reply, Prime Minister Dung highly valued Vietnam Partners’ investment initiative and urged the group’s executives to work with relevant agencies and local authorities to kick off projects of their interests as soon as possible.” In Third World countries like Vietnam, you can take such endorsements to the proverbial (state-owned) bank.

Foote declines comment. (Last year when I wrote that Dinh’s former law firm listed Vietnam Partners as a client, Foote said she couldn’t remember.) It appears that in the eyes of the leaders of the American business community, expressing any sympathy for the likes of Le Cong Dinh, Le Thang Long, and Tran Huynh Duy Thuc, even privately, could threaten lucrative business relationships with the Vietnamese government. At least you can’t call the three imprisoned men, “crony commies.”